Reducing Poverty and Investing in People: The new role of safety nets in Africa

Organization(s): World Bank
Author: Victoria Monchuk
Regions: Sub-Saharan Africa
Year: 2014
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Over the past two decades, Africa’s strong economic growth has paved the way for poverty reduction. Between 1995 and 2008, the percentage of the African population living in poverty fell from 58 percent to 48 percent (World Bank 2011). Nevertheless, high poverty levels persist, especially in rural areas, and the gap between income groups in terms of human capital and access to basic services is growing. In addition to chronic poverty—a situation where households are not able to improve their living standard and move out of poverty over time— vulnerability is high because environmental, economic, individual, and governance shocks frequently affect many households.

In the effort to increase the momentum in the progress toward sustainable poverty reduction, safety nets are an important tool in any country’s development strategy. The high levels of persistent poverty and the increasing inequality suggest that in speeding up poverty reduction, targeted interventions such as
safety nets, which provide regular and reliable support to poor households and help the poor invest in productive and capital-forming activities, may be important. Safety nets can also provide additional support in times of crisis to those who are temporarily thrown into poverty and can help them
develop strategies to build their resilience and thus avoid drawing down on their assets during times of hardship. Hence, safety nets will be essential to achieve the new World Bank goals.

Until the recent urgency to strengthen safety nets for the poorest in the face of the global crisis and repeated droughts, social protection has been implemented only on an ad hoc basis in Africa. Over the past few years, in the wake of the global economic and food and fuel price crises, a number of countries have started to coordinate their separate safety net programs into a national system. There is also momentum throughout the region to rationalize public spending to provide more adequate and targeted support to the poorest. This effort responds to the growing body of evidence indicating that safety nets reduce chronic poverty and vulnerability and promote inclusive growth. Impact evaluations of safety net programs in Africa show that safety nets help households meet their basic consumption needs, protect their assets, and enable them to invest in human capital. Moreover, recent research on the productive aspects of cash transfer programs in Africa suggests that these programs may have the potential to boost well-being in the future through productive investments.

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